Many people flock over to real estate to build wealth. These assets appreciate over time and provide monthly cash flow.
However, rental properties get difficult to manage as the properties age. You'll have to make several repairs, and field tenant calls. As you buy more rentals, the headaches increase.
A property manager hire can alleviate the stress. Property managers handle all of the work, from maintenance to filling vacancies. They make it easier for you to think like an investor instead of a handyman specialist.
Naturally, property managers cost money. How much does it cost to hire a property manager? We'll dive into the specifics.
Percentage of Monthly Rent
Property manager fees vary, but most of them charge a percentage of monthly rent. Most companies take a fee equal to 8%-12% of the monthly rent revenue.
Some property management companies ask for a fixed payment instead of rent percentages. Fixed payments ensure the manager receives compensation regardless of rent income. This approach can help real estate investors save money when rentals get filled.
The flat rate stays the same even if you raise rents. Some companies may bump up their flat rate each year to compensate.
If a manager offers a flat rate, ask them how long the rate stays flat and if they can change it at a moment's notice.
Contract Setup Fee
You'll pay a small fee for entering a contract with a property manager. This property manager cost only comes up once and comes close to $300.
Managers will conduct a property inspection and create financial accounts for bookkeeping purposes.
These extra costs help managers assess your property and organize your data.
More can go wrong with vacant properties. These properties take extra time to manage and will trigger a small fee.
Property managers visit the property weekly to establish a presence. Their visits can discourage criminals from breaking into the home.
Tenant Placement Fee
Property managers use various marketing strategies to reach tenants. These strategies cost time and money that managers aim to recoup quickly.
Most property managers charge a tenant placement fee ranging from 25%-75% of the first month's rent. After this first month, you'll continue getting charged a smaller percentage of the monthly rent.
Repairs and Maintenance
Property managers make repairs on your behalf. They purchase the materials and bring on specialists or do the work themselves.
These repairs will cost extra since the property manager acts as a middleman. You can save money doing this part yourself, but it will take up significant time.
You'd have to find the right person for the task at hand. Do you have a plumber and electrician in your contacts? Do you have substitutes in mind if your go-to contact is unavailable for a week?
Property managers build networks and know who to call during an emergency. Their networks enable them to solve problems sooner, leading to higher tenant satisfaction.
How Much Does It Cost to Hire a Property Manager?
You came to this post wondering how much does it cost to hire a property manager. Each property manager charges different fees.
Costs also vary based on a property's vacancy, need for repairs, and other factors. However, the best property managers provide a meaningful return on your investment.
You'll reclaim several hours and gain the ability to scale your operations. You can buy more rentals knowing someone will manage them for you.
Are you looking for help with Hawaii Property Management? Reach out to us today for assistance.